Skip to main content
Press Release

Buoyant M&A market continues despite economic instability

Mergers and Acquisitions
Mergers and Acquisitions

July 7, 2022

Dealmakers recorded the third highest half year volume of deals completed on record, although volatility risks M&A disruption during months ahead.
  • Global M&A volumes hit third highest total on record for opening six month period
  • Asia Pacific M&A is outperforming the rest of the world
  • North America M&A underperforms by -6.1pp, Europe M&A by -5.9pp
  • Deals in 2022 are taking longer to complete compared to last year

LONDON, July 7, 2022 — Reports of global merger and acquisition (M&A) activity entering a dry spell appear premature with dealmakers recording the third highest number of completed deals in an opening six months since M&A deal research by WTW began in 20081. According to analysis based on WTW’s Quarterly Deal Performance Monitor (QDPM), the only years that have surpassed the 441 deals (valued over $100 million) completed in the first half of 2022 were 2021, during an exceptional pandemic rebound, and 2015.

Although deal activity has slowed from its record-setting 2021 pace, when 484 deals were completed in the first six months, M&A volumes remain buoyant this year with the number of transactions continuing to exceed pre-pandemic levels, according to the QDPM data, run in partnership with the M&A Research Centre at Bayes Business School.

Deal performance, in contrast, has struggled to defy gravity and has clearly been impacted by market volatility. Amid soaring inflation, rising interest rates, geopolitical tensions and the ongoing Covid-19 pandemic, buyers underperformed the wider market2 by -4.8pp, based on share price performance, during the first six months of 2022.

The average time to close a deal has also increased in 2022, with 60% of transactions during the first six months taking over 70 days (the long-term average time between announcement and closing), compared to 54% in the first half of 2021. In contrast to last year when competition for assets was fierce and buy-side deal teams had to work with compressed diligence periods to stay competitive in the bid process, market volatility in 2022 has raised the stakes for buyers, advocating caution and increasing due diligence.

The pipeline remains very healthy, even with deal execution becoming harder due to increased volatility and macro concerns.”

Jana Mercereau | Head of Corporate M&A Consulting, Great Britain at WTW

Jana Mercereau, Head of Corporate M&A Consulting, Great Britain at WTW, said: “While there has been a slowdown this year, following the record-setting pace of 2021 thanks in part to booming markets and widespread stimulus measures during the pandemic, the pipeline remains very healthy, even with deal execution becoming harder due to increased volatility and macro concerns.”

The number of megadeals (valued over $10 billion) was up to 12 in the first half of 2022 compared to 10 in the same period last year, signalling that companies have not been put off from completing the larger deals planned and announced during the post-pandemic boom, despite the broader market turmoil of the first half of 2022.

All regional acquirers, except those in Asia-Pacific (APAC), underperformed in H1 2022. APAC acquirers outperformed their regional index, showing an overall performance of +7.2pp with 96 deals closed. Meanwhile, North American acquirers underperformed their index by -6.1pp with 220 deals completed in the first six months of 2022, and dealmakers from Europe underperformed their index by -5.9pp with 102 deals in the same period.

Mercereau said: “Debt is still relatively cheap by historical standards and abundant dry powder from private equity firms and SPACs raised during 2021 ensure the appetite for deals remains strong, although clear risks lie ahead. Geopolitical uncertainty, rising interest rates and supply chain disruptions create a volatile mix that will make deals more complex, take longer and require a new focus from buyers on how to improve the odds of success.

“At a time when change fatigue is at an all-time high, with the pandemic in its third year, clear and consistent communication to employees and the market will prove more critical than ever to preventing greater disruption and confusion, and ensuring deals get over the finish line, create value and drive long-term growth.”

WTW QDPM Methodology

  • All analysis is conducted from the perspective of the acquirer.
  • Share-price performance within the quarterly study is measured as a percentage change in share price from six months prior to the announcement date to the end of the quarter.
  • All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered.
  • Only completed M&A deals with a value of at least $100 million which meet the study criteria are included in this research.
  • Deal data sourced from Refinitiv.

About WTW M&A

WTW’s M&A practice combines our expertise in risk and human capital to offer a full range of M&A services and solutions covering all stages of the M&A process. We have particular expertise in the areas of planning, due diligence, risk transfer and post transaction integration, areas that define the success of any transaction.

About WTW

At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organisations sharpen their strategy, enhance organisational resilience, motivate their workforce and maximise performance.

Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.

Footnotes

1 The Quarterly Deal Performance Monitor (QDPM) has been run by WTW since 2008 in partnership with the M&A Research Centre at Bayes Business School.

2 The M&A research tracks the number of completed deals over $100m and the share price performance of the acquiring company against the MSCI World Index, which is used as default, unless stated otherwise.

Related Services

Contact Us